Daily Wrap-up

by Jamie Henry15 May 2015

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Daily Wrap-up

TSX ends higher despite declining oil prices
Oil prices were heading lower again Friday with energy and financial stocks falling victim. However a stronger showing from the other sectors and a confident lead from Wall Street helped the week end on a positive. Wall Street advanced despite weak consumer confidence and factory production data, helped by a lower US dollar and more stability in the bonds market. Asian markets closed mainly higher although concern over liquidity in China saw Shanghai buck the trend. European markets ended the week lower as the euro gained against the US dollar.

The S&P/TSX Composite Index closed up 80.0 (0.53 per cent)

The NYSE closed higher (Nasdaq slightly lower)

Oil is trending mixed (Brent up to $66.90, WTI down to $59.84 at 4.10pm)

Gold is trending lower

The loonie is valued at U$0.8319 (at 4.10pm)

BoC could be forced into another interest rate cut
If current conditions continue then the Bank of Canada may have little choice but to make another cut in interest rates. Although Stephen Poloz has said that the January rate cut has done the job it intended to do analysts now say that with a strong Canadian dollar and higher bond yields could force his hand. Bank of America experts say that if the Fed raises US rates then it will add to the pressure for the BoC to move in the opposite direction to loosen monetary supply.

Manufacturing sales still rising
Manufacturing sales increased again in March, the second time in six months. Statistics Canada released figures Friday which show 2.9 per cent growth to $51 billion. Sales were higher in 10 of the 21 industries especially aerospace and motor vehicles. The figures outperformed expectations with Thomson Reuters poll of economists forecasting 1.2 per cent.

Canada pledges to cut carbon emissions by 30 per cent in 15 years
By 2030 Canada’s carbon emissions will have been cut by 30 per cent from 2005 levels. The new commitment has been made by environment minister Leona Aglukkaq. Speaking in Winnipeg she said that it was an ambitious and fair target but despite an increasing population Canada is a world-leader in the generation of clean electricity. There are new rules on methane emissions and the chemical sector and the target also assumes lower oil output.

Car loans cause concern
The pace of new car loans is faster than inflation and GDP and the Bank of Canada and others are concerned that it could be a new debt bubble. The largest issue is the length of the loans; some as long as 8 years to keep payments low. In fact 66 per cent of new car loans were for 6 year periods or more according to JD Power. It could mean that more owners end up owing more than their car is worth when they come to trade in.